The Tampa Tribune reported Friday that the Florida Department of Insurance is seeking McKinsey & Company consulting reports which are allegedly tied to an Allstate plan to underpay claimants. These documents are at the heart of contention in a Colorado case where Allstate is being fined for not providing them, and also in a Missouri Department of Insurance investigation where Allstate is being fined $25,000 per day for refusing to cooperate with the state regulator’s investigation. I am seeking similar documents in an Indiana case in which Allstate has been already sanctioned and ordered to provide them. For over a decade, I have criticized Allstate’s reliance on a claims program which appears to unethically calculate the value of an individual’s bodily injury claim and not honestly disclose how Allstate arrived at its determination.
The situation is analogous to an Emergency Hospital charging you too much and then not providing the details of the bill nor an honest explanation as to how it arrived at its numbers. Allstate has understandably been reluctant to disclose its claims practice and expose itself to the Civil and Regulatory penalties that should accompany such a breach of the public trust and its knowing failure to act in good faith.
In case after case, Allstate simply refuses to fully comply with legal requests for the internal memoranda or ties up compliance through delay and stonewalling. The amazing aspect of the Department of Insurance request is that it has come so late after Allstate’s claims processes were changed. The McKinsey documents were primarily generated over a decade ago, and I obtained them when I chaired a Bad Faith Litigation Group. See, Mark Ballard, Allstate’s Master Plan?, Nat’l Law Rev., November 9, 1998, at A1, (col.2). One of my colleagues, David Berardinelli, wrote a book on this topic: From "Good Hands" to Boxing Gloves – How Allstate Changed Casualty Insurance in America.
We suspect the most revealing documents are contained in management emails regarding the performance and profits of Allstate’s claims programs. In our experience, internal emails by management are more revealing than reports generated for display to many employees. The Department should seek these in addition to the McKinsey documents. It is refreshing that regulators are finally seeking transparency of Allstate’s claims practice. Still, one has to wonder why it has taken so long and if the Department is looking in all the right places.
They should visit our law office to obtain some of what they are seeking; we’ve had some, but not close to all, of these documents for 10 years. Based on past experience, Allstate will not be in a hurry to provide anything which would expose how it treats its customers and which could expose it to further penalty or criticism. It is unlikely Allstate will voluntarily allow a third party to challenge its claim that "you’re in good hands with Allstate."